Reverse logistics is a major issue for retailers. Whether goods are faulty, damaged, recalled, expired or simply not fit for purpose; dealing with them efficiently is a big issue, getting value from them is near impossible. Forward logistics focuses on scale, efficiency, moving large amounts of product and getting it to warehouse or store for sale. Reverse logistics is fragmented, with emphasis on redistributing individual items to multiple stakeholders across many borders to manage the next phase of the returned product. Clyde Buntrock, Vice President at Allport Cargo Services & Adam Joel, Managing Director at TIC look at how their new partnership is seeking to address the challenges of reverse logistics.
Changing shopping habits have highlighted the need to streamline returns logistics in recent years. There’s been an increase in returns from items bought ‘on the fly’ via mobile devices. Omni-channel has made returns logistics more challenging; with clothing for example, shoppers replicate a changing room at home by over ordering – and are increasingly willing to pay for the privilege. It varies across different categories, but in the UK 25-40% of online orders are returned – with the post-Christmas period being peak return season. Just this week, research found that nearly 57% of retailers said dealing with day-to-day cost of managing returns is negatively impacting their business.
All of this means that logistics and customer services need to be truly integrated so that the process is seamless from the customer’s perspective, while ensuring it’s an authentic return and deciding which party in the supply chain it needs to return to for processing. For retailers, it’s important to minimise freight and logistics costs, response times, administration and environmental impact. But it also has to be easy and seamless for the customer; simply because a good return experience is also a competitive advantage.
Allport Cargo Services work in partnership with Australian company, TIC Group, reverse logistics experts in post-purchase non-perishable goods. The company has 15 global sites and manages 15 million store returns each year. Both Allport Cargo Services and TIC Group have a strong foundation in constantly striving to deliver innovative solutions and firmly believe in delivering a Technology-enabled Supply ChainTM. TIC have integrated circular economy principles in developing industry solutions to industry problems. Using technology and smart business design, TIC is delivering unique reverse logistics solutions for retailers:
Innovation and data
Today there are so many different permutations of what retailers, suppliers and regulators need to create a great customer experience. This requires robust technology to support an efficient reverse logistics function. TIC has developed a platform called solvupTM, which aims to address the long-standing tug of war around returns where no fault is found and where suppliers refuse a refund. solvupTM is the result of a collaborative approach between major retailers, vendors and service agents – bringing together retailers’ best practices and vendors’ insights and recommendations, at each and every transaction.
It’s challenging, time consuming and expensive to manage returns on an individual store basis. Returned stock takes up scarce space at the back of a store, which means it can’t operate as efficiently. solvupTM is a central returns model for the retail industry, where each return gets scanned, collected and taken to central returns centre to be validated. TIC then deals with all stakeholders to reconcile products between retailers and suppliers, reducing operational costs and creating sustainable outcomes.
Along the way vital data is collected to provide insight on returned items. This real-time information provides a barometer to measure levels of customer satisfaction and the more retailers understand about the reasons for return, the better they can feed this data into procurement decision making. We have seen many technological advances that mean improved reporting and analytics, but companies still struggle to translate that into actionable insights. TIC translates the complex data and develop it into real opportunities for retailers.
With The Good Guys electrical stores in Australia, solvupTM achieved 50% more repairs within the first eight months, resulting in more appropriate customer outcomes, less revenue tied up in return claims and average repair time reduced by two days. Data collected has enabled a much clearer understanding of costs involved with supporting repair options. The data has enabled fact based conversations with suppliers using real time data rather than best guesses or historical information. There are also significant environmental benefits.
An end-to-end perspective
We work closely with niche players and large global retailers to find industry solutions to industry problems; TIC has been at the forefront of creating downstream opportunities and industries for products otherwise destined for landfill. Good practice for us means collaborating with all the relevant stakeholders and driving innovation design that delivers circular economy outcomes. This is vital because if everyone looks at what is best for them, you’ll never find the right solution – you get a much better answer when everyone is collaborating. Yes, having the lowest possible supply chain costs is also important, but that’s not the answer in itself. This is why it’s so important to have a retail network with a centralised approach.
Minimising the environmental impact
A core element in an efficient returns logistics operation is to minimise the impact on the environment. If you consider that carbon emissions are largely locked in the manufacturing of a product, when a relatively new electrical item is returned, there can be significant carbon impact if the product is replaced. If a radio has only been used for 30 days and it’s meant to last five years, then there’s an environmental impact. We encourage repairs, but educating consumers about sustainability is also vital. Traditionally, we think of educating consumers on the products, but, as demographics change we’re seeing different habits. Millennials for example don’t hoard as much, they rent more, have less possessions and buy digital services – so there are huge opportunities to inform consumers around sustainability.
If someone is willing to repair rather than return, there will be significant carbon savings. For example, the mobile phone industry is ripe for a repair or replacement option, our research indicates that the CO2 saved through the repair of mobile phones is the equivalent to driving a family car around the UK more than six times.
With extensive environmental and operational benefits, an effective reverse logistics design delivers exceptional customer experience; protecting retailers brand and reputation for service.
Reverse logistics strategies have been overlooked in the past, but the rise of omni-channel means that retailers are dealing with more returns and therefore have to pay more attention to their returns processes. Reverse logistics often gets stuck in the supply chain and that potentially has bigger issues for store operation, because it means they are not looking at true end-to-end logistics. It’s important to constantly challenge what people are doing to mitigate returns.
Technology is enabling companies like Allport Cargo Services and TIC to standardise and simplify processes that can be tailored to meet clients’ needs. Free and easy return is not forever because ultimately the service is not free. But with better use of data, a more end-to-end perspective and prevention to reduce returns altogether, the pieces of the big puzzle begin to fit together. Essentially the most important thing is what’s the best customer experience and that guides everything.